In bs december 31 2011 balance sheet what should be the, Ask an Expert

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On January 1, 2011, Packard Corporation leased equipment to Hewlitt Company. The lease term is 8 years. The first payment of $450,000 was made on January 1, 2011. Remaining payments are made on December 31 each year, beginning with December 31, 2011. The equipment cost Packard Corporation $2,400,000. The present value of the minimum lease payments is $2,640,000. The lease is appropriately classified as a sales-type lease. Assuming the interest rate for this lease is 10%, what will be the balance reported as a liability by Hewlitt in the December 31, 2012, balance sheet?

A. $1,704,900
B. $1,509,000
C. $1,950,000
D. $1,959,000

On December 31, 2011, B Corp. sold a machine to Royal and simultaneously leased it back for one year. Pertinent information at this date follows:
Sales price
$720,000

Carrying amount
660,000

Present value of lease rentals
68,200

($6,000 for 12 months at 12%
Estimated remaining useful life 12 years

In B's December 31, 2011, balance sheet, what should be the deferred revenue from the sale of this machine ?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M966093

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